Want to buy-to-let? Three things you need to consider #BuytoletMortgages might sound like a good way to make money, but they can be more expensive and risky than a standard #housepurchase - plus there are other expenses to bear in mind. And even if youve already calculated you can afford the risk, there are some things you need to know. New HSBC research shows #rentalproperties in Southampton are yielding 8.73% - that’s the percentage of additional #rent over the mortgage value - with Manchester, Nottingham, Blackpool and Hull the next best for returns. Meanwhile Brighton and Reading have the fastest growing returns as #rentalprices rise there. They’re lower in #London as #houseprices have risen faster than #rents. Any future increase in #interestrates would affect yields too. Read the advice below to see whether buy-to-let is right for you: It can be difficult to get one You’ll struggle to get a #buytoletmortgage if you don’t already own your #ownhome, whether outright or with an outstanding mortgage. And you are likely to find it hard to get a buy-to-let mortgage unless you earn at least £25,000 a year. You’ll also need good credit and be able to finish the #mortgage by the time you are 70. For more details of who can get one and how read this Buy-to-let mortgages guide from the #MoneyAdviceService: https://moneyadviceservice.org.uk/en/articles/buy-to-let-mortgages Theyre not subject to the new mortgage rules Unlike #buyingahome to live in, the mortgage will be treated as a commercial loan, and as such its unregulated. That means you wont necessarily go through the same affordability tests. Instead it will be based around your #rental income - although some #lenders will look at what you can afford based on income to check you can still make the payments when the property is empty. The #rental income will need to be verified by a #surveyor and it will typically need to be 25% higher than the #mortgagepayment. So if your #monthlypayment is £1000, the #rent you charge needs to be at least £1,250. Don’t forget the additional costs It’s not just a solicitor you need to account for. You may have #fees for #LettingAgents, maintenance costs, special #landlord and #rent insurances and even capital gains taxes when you sell. Plus the #property could be empty between #tenants. There are also many other costs that come with any house purchase. Money Advice Service research revealed that 55% found the total bill for #buying a #home more than they expected.
Posted on: Wed, 18 Jun 2014 14:25:00 +0000
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